In a major shake-up for the global artificial intelligence (AI) industry, Microsoft and OpenAI have announced a non-binding deal to redefine their partnership. The agreement sets the stage for OpenAI to transition into a for-profit company, a restructuring that could ultimately pave the way for a public market listing.
Described as the “next chapter” in one of the most influential partnerships in AI, the new arrangement reflects the fast-changing dynamics of the AI ecosystem, with both companies pursuing independent but still interlinked strategies.
The specifics of the commercial restructuring remain undisclosed, but both firms confirmed they are working on a definitive agreement.
For OpenAI, the move represents a significant shift towards a more conventional corporate model, enabling it to raise capital on Wall Street terms. This shift will help the company sustain its rapid revenue growth, now running into billions, and meet its ever-increasing demand for computing resources.
Microsoft has been a central figure in OpenAI’s growth story:
In 2019, Microsoft invested $1 billion in the AI startup.
In 2023, it followed up with a massive $10 billion investment, securing exclusive rights to market OpenAI’s tools via Azure cloud services, while also enjoying priority access to its AI models.
This arrangement gave Microsoft a unique edge in the competitive cloud and AI landscape. However, things began to change in 2025.
Earlier this year, OpenAI began moving away from Microsoft’s exclusive ecosystem. The company launched Project Stargate, an ambitious AI-dedicated data centre initiative, and signed blockbuster cloud deals worth $300 billion with Oracle along with a major partnership with Google Cloud.
This diversification underscores OpenAI’s need for massive computing power as its revenues scale into the billions. By broadening its network of cloud partners, OpenAI is reducing reliance on Microsoft and positioning itself for long-term sustainability.
While OpenAI diversifies, Microsoft is not retreating. The tech giant still seeks guaranteed access to OpenAI’s cutting-edge technology, even in a scenario where OpenAI claims to have achieved artificial general intelligence (AGI) — a milestone that, under the current framework, could formally end their collaboration.
Understandably, Microsoft wants safeguards to avoid being “left out in the cold” at that crucial point.
OpenAI’s unusual governance structure adds another layer of complexity. Currently, its nonprofit arm controls the organization, and under existing terms, it is expected to receive over $100 billion — nearly 20% of OpenAI’s targeted $500 billion valuation in private markets.
As chairman Bret Taylor noted, this could make OpenAI’s nonprofit arm one of the wealthiest nonprofits in the world, with resources on par with global philanthropic giants.
However, before OpenAI can fully embrace its for-profit transformation, it faces significant regulatory hurdles. Attorneys general in California and Delaware must approve its structural conversion.
The company is racing against time to finalise the transition by year-end. Missing the deadline could result in billions of dollars in potential funding being forfeited — a setback that could slow its aggressive expansion.